OECD Tax’s Post

The international taxation landscape is still playing catch up to the advancement of more globalized ways of doing business. The OECD has over the years proposed various measures to address the issue of base erosion and profit shifting by Multinational Enterprises through cross boarder transactions. While we await the National Budget 2024/25 to be read tomorrow, we are eager to see what Tanzania shall implement from the OECD's recommendations as part of the current global tax reforms. Our Donasia J. Massambo has delved into this subject and expounded on what Africa is doing in this article that was published on the Citizen Newspaper today. https://lnkd.in/ezacA55t #internationaltaxation #OECD #BEPS #Nationalbudget2024/25

📘 [OUT NOW] 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠 𝑖𝑛 𝐴𝑓𝑟𝑖𝑐𝑎 2024 This report highlights the latest trends in tax revenues across 36 African countries, including Mozambique, Somalia and Zambia for the first time. In 2022, Africa’s average tax-to-GDP ratio rose by 0.5 percentage points to 16.0%. However, the level remained below other regional averages (19.3% in Asia-Pacific, 21.5% in LAC and 34.0% in OECD countries), underlining the need for diversified and sustainable revenue strategies. The report also examines trends in non-tax revenues and features a special chapter on facilitation and trust as drivers of voluntary tax compliance, based on a study by the African Tax Administration Forum (ATAF). 📥 Access the report and explore detailed country data: English ➡️ https://lnkd.in/dbnfMCTD French ➡️ https://lnkd.in/dBNNZc_d

As Turkey prepares to unveil a corporate tax overhaul, including a minimum 10% levy on companies, significant economic shifts are on the horizon. This policy change, driven by a need to stabilise the country's $1tn economy, addresses imbalances resulting from previous economic approaches. The intent behind these reforms is twofold: broadening the tax base and tightening fiscal policy to manage soaring inflation, which stood at 71.6% in June. By distributing the economic reform burden more equitably, the Turkish government hopes to foster a more balanced and sustainable economic environment. This overhaul is a strategic move to restore confidence in Turkey's economic governance. The implications of such a policy shift could be profound, potentially setting a precedent for other economies grappling with similar issues. 🔗 Interesting read from the Financial Times: https://lnkd.in/eR86kcw4 #Turkey #CorporateTax #EconomicPolicy #Macroeconomics #FiscalStability #InflationControl #TaxReform

Taxes are essential for funding public services, but high taxes can disincentivise economic activity. The Laffer curve illustrates this, suggesting that while increasing taxes initially boosts government revenue, excessive rates may lead to a decline. Recent research by National Treasury of South Africa and the University of Helsinki explored the effects of South Africa’s 2017 top marginal tax rate hike from 41% to 45%. While the increase was projected to raise revenue, the opposite occurred—revenue from the top income bracket fell from R103bn to R97bn. The research suggests that individuals responded by reducing work, switching jurisdictions, or evading taxes, pushing South Africa onto the wrong side of the Laffer curve. While wage inequality decreased slightly, taxable income also dropped. Additionally, companies associated with these high-income earners showed reduced output, further hampering economic growth. Ultimately, the tax hike appears to have done more harm than good to the South African economy, as it constrained both individual productivity and business growth. #taxpolicy #economics #southafrica #laffercurve #taxation #governmentrevenue #economicgrowth #taxreform #marginaltax #policyfailure Source: Sygnia Asset Management https://lnkd.in/d4aswXrx

𝐒𝐭𝐚𝐭𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐍𝐚𝐭𝐢𝐨𝐧: 𝐁𝐮𝐝𝐠𝐞𝐭 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 Johannesburg, 21 February 2024 — Minister of Finance Enoch Godongwana delivered his Budget Speech 2024 to Parliament and the nation on 21 February. A key announcement was that tax rates will not be increased in 2024/2025, as previously signalled by the Medium-Term Budget Policy Statement (MTBPS) 2023, to generate the extra R15bn needed in revenue. Instead, National Treasury will extract more direct taxes from the economy – and from households in particular – by not making inflationary adjustments to the Personal Income Tax (PIT) brackets and medical aid credits. “𝘞𝘩𝘪𝘭𝘦 𝘉𝘶𝘥𝘨𝘦𝘵 2024 𝘩𝘢𝘴 𝘢𝘷𝘰𝘪𝘥𝘦𝘥 𝘥𝘪𝘳𝘦𝘤𝘵𝘭𝘺 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘪𝘯𝘨 𝘵𝘢𝘹 𝘳𝘢𝘵𝘦𝘴 𝘪𝘯 𝘴𝘦𝘢𝘳𝘤𝘩 𝘰𝘧 𝘢𝘯 𝘦𝘹𝘵𝘳𝘢 𝘙15𝘣𝘯 𝘪𝘯 𝘳𝘦𝘷𝘦𝘯𝘶𝘦𝘴, 𝘵𝘢𝘹 𝘳𝘢𝘵𝘦𝘴 𝘢𝘳𝘦 𝘣𝘦𝘪𝘯𝘨 𝘪𝘯𝘥𝘪𝘳𝘦𝘤𝘵𝘭𝘺 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦𝘥 𝘣𝘺 𝘯𝘰𝘵 𝘮𝘢𝘬𝘪𝘯𝘨 𝘪𝘯𝘧𝘭𝘢𝘵𝘪𝘰𝘯𝘢𝘳𝘺 𝘢𝘥𝘫𝘶𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘵𝘰 𝘗𝘐𝘛 𝘣𝘳𝘢𝘤𝘬𝘦𝘵𝘴. 𝘒𝘦𝘦𝘱𝘪𝘯𝘨 𝘵𝘩𝘦 𝘗𝘐𝘛 𝘣𝘳𝘢𝘤𝘬𝘦𝘵𝘴 𝘶𝘯𝘤𝘩𝘢𝘯𝘨𝘦𝘥 𝘢𝘭𝘰𝘯𝘨𝘴𝘪𝘥𝘦 𝘪𝘯𝘧𝘭𝘢𝘵𝘪𝘰𝘯 𝘢𝘥𝘫𝘶𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘵𝘰 𝘸𝘰𝘳𝘬𝘦𝘳𝘴’ 𝘪𝘯𝘤𝘰𝘮𝘦 𝘳𝘦𝘴𝘶𝘭𝘵𝘴 𝘪𝘯 𝘢 𝘤𝘰𝘮𝘱𝘰𝘯𝘦𝘯𝘵 𝘰𝘧 𝘵𝘩𝘦 𝘭𝘢𝘣𝘰𝘶𝘳 𝘧𝘰𝘳𝘤𝘦 𝘮𝘰𝘷𝘪𝘯𝘨 𝘪𝘯𝘵𝘰 𝘩𝘪𝘨𝘩𝘦𝘳 𝘵𝘢𝘹 𝘣𝘳𝘢𝘤𝘬𝘦𝘵𝘴 𝘢𝘯𝘥 𝘵𝘩𝘦𝘳𝘦𝘧𝘰𝘳𝘦 𝘱𝘢𝘺𝘪𝘯𝘨 𝘮𝘰𝘳𝘦 𝘗𝘐𝘛. 𝘛𝘩𝘪𝘴 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦𝘴 𝘵𝘩𝘦 𝘣𝘶𝘳𝘥𝘦𝘯 𝘰𝘧 𝘵𝘢𝘹𝘦𝘴 𝘰𝘯 𝘵𝘩𝘦 𝘢𝘷𝘦𝘳𝘢𝘨𝘦 𝘚𝘰𝘶𝘵𝘩 𝘈𝘧𝘳𝘪𝘤𝘢𝘯.” - Mbai Rashamuse, PwC Southern Africa Tax and Legal Services Leader #SONA #BudgetAnalysis #Tax #PersonalIncomeTax 

Tax to GDP is still a thorn in the flesh for many African countries. It seems that African countries are still collecting at rates way below the juicy rates achieved by OECD countries. The reasons for this still confound many but a large untaxed informal sector may be part of the reasons.

🚨 2024 Tax Statistics Bulletin: Key Highlights 🚨 The National Treasury and SARS recently released the 17th annual Tax Statistics, reflecting South Africa’s tax performance from 2019/20 to 2023/24. Here are some standout points: 💡 Tax Collection Growth Total collections rose from R113.8 billion in 1994/95 to an impressive R1.74 trillion in 2023/24. In 2023/24 alone, SARS collected R2.2 trillion in gross tax revenue, refunded R413.9 billion, and secured net revenue of R1.7 trillion. 💡 Key Trends in 2023/24 Personal Income Tax (PIT): Strong due to employment and earnings recovery. Company Income Tax (CIT): Declined, especially in mining, due to lower commodity prices and operational challenges. VAT: Growth remained subdued, reflecting consumer pressure from high interest rates. 💡 Compliance Efforts SARS collected R260.5 billion from compliance initiatives—a 25.5% increase from the previous year. 💡 Trade Stats SARS facilitated trade worth R3.93 trillion in 2023/24. Import VAT and Customs Duties contributed 19.3% to total tax revenue. 💡 Interesting PIT Stats Gauteng dominates, with 35.5% of assessed taxpayers. The average taxable income in Johannesburg Metro: R484,672. The average PIT rate declined slightly to 21.3%. SARS continues to play a pivotal role in ensuring compliance and enabling growth despite challenges like global economic shifts and local infrastructure constraints. Let’s keep the conversation going—how do you see these tax trends shaping South Africa's future? #TaxStatistics #SARS #SouthAfrica #TaxCompliance #EconomicGrowth

Budget 2024: How It Affects You and Your Business READ THE FULL ARTICLE HERE >>> https://lnkd.in/ekhKSxKx “Our bigger challenge… is that our pie is not growing fast enough and this limits our ability to generate sufficient revenues to distribute among our priority areas.” (Finance Minister Enoch Godongwana – Budget 2024) Finance Minister Enoch Godongwana’s third Budget Speech in an election year contained few surprises, but also little in the form of good news, especially for South Africa’s personal income tax payers. The Minister quoted dismal local average expected real GDP growth of 0.6% for 2023, which is projected to reach 1.6% between 2024 and 2026. This poor economic performance is ascribed to the persistent constraints in electricity supply and freight, rail and ports, as well as a high sovereign credit risk. And the result? A sharp drop in tax revenue collection for 2023/24 which, at R1.73 trillion, is R56.1 billion lower than estimated! To make up the shortfall, Budget 2024 contains tax measures that will raise an additional R15 billion in 2024/2025, mainly through income tax raised by not adjusting personal tax brackets, rebates and medical tax credits for inflation, as well as above-inflation increases in alcohol and tobacco excise duties. Other main proposals included no increase to the general fuel levy for 2024/25, a global tax on multinational companies in South Africa with an annual revenue exceeding €750 million and the R150 billion withdrawal from SA's Gold and Foreign Exchange Contingency Reserve Account. These announcements are briefly detailed below, along with some of the other announcements that will impact individuals and businesses... https://lnkd.in/ekhKSxKx #newsletter #budget2024 #business #financeminister #gdpgrowth #taxrevenue #sars #economy #alcohol #cigarettes #vaping #taxes #taxcollection #taxaffairs #fuellevy #petrolprice #levies #roadaccidentfund #mdaccountants

R22 billion tax blow for South Africa – ‘difficult trade-offs’ coming Enoch Godongwana, the Finance Minister of South Africa, recently spoke about worries over the South African Revenue Services (SARS). He said that SARS is expected to miss its revenue target for February by R22.3 billion. This shortfall could have serious effects on the country’s finances. It may impact the funding for essential services and development projects. #ZeeliePASA #AccountingFirm #AccountingServices #TaxServices #PayrollServices #SaipaProud #TaxPractitioners #ProfessionalAccountants #TaxAdvisory #TAX

Budget 2024: How It Affects You and Your Business READ THE FULL ARTICLE HERE >>> https://lnkd.in/eU-B3ja2 “Our bigger challenge… is that our pie is not growing fast enough and this limits our ability to generate sufficient revenues to distribute among our priority areas.” (Finance Minister Enoch Godongwana – Budget 2024) Finance Minister Enoch Godongwana’s third Budget Speech in an election year contained few surprises, but also little in the form of good news, especially for South Africa’s personal income tax payers. The Minister quoted dismal local average expected real GDP growth of 0.6% for 2023, which is projected to reach 1.6% between 2024 and 2026. This poor economic performance is ascribed to the persistent constraints in electricity supply and freight, rail and ports, as well as a high sovereign credit risk. And the result? A sharp drop in tax revenue collection for 2023/24 which, at R1.73 trillion, is R56.1 billion lower than estimated! To make up the shortfall, Budget 2024 contains tax measures that will raise an additional R15 billion in 2024/2025, mainly through income tax raised by not adjusting personal tax brackets, rebates and medical tax credits for inflation, as well as above-inflation increases in alcohol and tobacco excise duties. Other main proposals included no increase to the general fuel levy for 2024/25, a global tax on multinational companies in South Africa with an annual revenue exceeding €750 million and the R150 billion withdrawal from SA's Gold and Foreign Exchange Contingency Reserve Account. These announcements are briefly detailed below, along with some of the other announcements that will impact individuals and businesses... https://lnkd.in/eU-B3ja2 #newsletter #budget2024 #business #financeminister #gdpgrowth #taxrevenue #sars #economy #alcohol #cigarettes #vaping #taxes #taxcollection #taxaffairs #fuellevy #petrolprice #levies #roadaccidentfund #mdaccountants